SOMETIME in the mid-80s, news about what (now Magsaysay awardee) Mhd Yunus and his Grameen Bank were doing started filtering back here.
From what I gather from talks I had with several people in the late 80s, interest about how such a venture could be set up here had piqued the curiosity of different people. One of them, if I remember, was Bruce Tolentino, then an Undersecretary or Assistant Secretary at the Department of Agriculture.
Without my realizing it, one other agency in government decided to get off the high horse and put up a similar program, albeit, with local flavor.
Remember my previous blog post about one of my favorite people, the late Mamita Pardo de Tavera? Well, it seems that the Department of Social Welfare and Development had already begun to explore the possibility of bringing the Grameen concept over here, minus the trappings of a bank. When the good woman transferred to the Philippine Charity Sweepstakes Office (PCSO) to serve as its chairperson, she brought along with her a trusted Undersecretary, Linda Valenzona, plus a coterie of trained social workers. Me, I only had toyed with the concept, and like a typical alpha male, kept mulling the idea over and over in my mind. These women did what I believe many women are best at: They just went ahead and did it. So, while drawing up the parameters for the online lottery project, I kept looking over my shoulder to see what these busy women were doing in this new field of microfinance.
The group in the PCSO set up a small fund in low nine figures — a much more intelligent and beneficial project than those blasted ambulances that almost never got used as ambulances — as a seed fund. The social workers were trained especially to work with poorer people in the rural areas. The basic model of using groups of five was retained, with each group or different sets of fives placed under a sponsoring NGO. The NGOs took over the task of training, monitoring, following up, etc.
Basic accounting skills and fundamental knowledge of banking procedures followed. The end result? Linda and her group were happy to report to Mamita that the groups all managed to pay back, or, even with slight delays, paid in full. And the amounts given out for projects were typically Grameen-sized: very small. Happiest were the NGOs when they were told that they could recycle the funds into new groups of five but with the provision that the present groups they were working with would serve as trainors.
I bumped into present PCSO chairperson Serge Valencia a couple of months back in birthday party of a mutual friend. When I asked him, he said they were not running the project anymore. He was surprised to learn from me that the social workers brought over by Mamita were still there, and could mobilize in an instant. I wonder if he will take the cudgels for this project.
December 3rd, 2007 at 11:44 am
Hi!
May I excerpt here my post in my blog, “How to Help Improve Philippine Society?” In that post, I suggested some ways by which representatives from business, education, etc., may short-circuit the current system whereby the poor are kept dependent on dole-outs from government and other institutions, keeping them malleable and thereby perpetuating the patronage system.
One primary shortcoming of NGO’s and banks currently involved in microfinance is that very VERY FEW customers are not really helped long-term, a great majority fail to grow, and many just go from one NGO or microfinance institution to another securing loans from one business cycle to another.
Here’s one point I raised in my blog:
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4) IMPORTANT: The training in entrepreneurship should not be just the old “Livelihood training programs” such as soap-making, candle-making, detergent manufacture, etc. These have been tried for years and found wanting, with very few exceptions. This is because the people who are trained in these livelihood skills all start producing soap, or processed meat, or candles, or whatever, all at the same time, and compete with each other and ultimately kill each other’s businesses quickly (while the NGO’s and mission organizations which conducted the livelihood programs feel self-satisfied with finishing their targeted programs for the year and send self-congratulatory reports to their foreign partners and supporters, complete with numbers and photos, to ask for money for more programs next year—while the people they have “trained”, and who have killed each other’s businesses, look for other “skills” and other NGO’s from whom they can borrow capital again, to try again and again…). The help should include the provision of solid and actual marketing contacts, establishment of cooperatives, etc. Through cooperative ventures, the people band together instead of killing each other (one possible setup would be for certain persons or families to take care of the soap supplies, another of the processed food supplies, another of the garments supplies, etc). Through marketing contacts (if possible, marketing CONTRACTS), the people are enabled to actually sell the products or services which they have been trained to provide. A big problem with current livelihood trainings is that the beneficiaries have no contacts, means, training, or skill to properly and profitably market their products and services, and they all compete and kill each other selling within the same community.
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Shalom!
Mel C.
November 28th, 2007 at 2:45 am
i have read yunus’ book. my mother was already doing this years before yunus’ book came out. when she died, she left us a small notebook with a list of borrowers. we decided to forgive the debts. her business died with her but someday, i will revive it.
November 27th, 2007 at 8:17 pm
Hi Digs,
Microfinance has gone a long way since then. Many NGOs and rural banks have embraced the Grameen approach to group lending. Of equal prominence is the growth of individual lending through the ASA approach (also from Bangladesh) and MABS or Microenterprise Approach to Banking Services. I have been involved in MABS since 2003 and have worked with over 20 banks in setting up their MABS operations with some degree of success. There is still so much to do but we keep plodding along.
November 27th, 2007 at 2:28 pm
I am interesting to start microfinance/business/loan for the poor family in my country.
I still learning by myself and reading the news online.
It can change the community if we can run regularly.
thanks
November 27th, 2007 at 10:06 am
PCSO, a “charity” sweepstakes office owned and run by government, can never be a sustainable microfinance institution. People will always have a perception of PCSO that will militate against a more commercial, market-oriented, financial relationship between “lender” and its “poor customers”.